Rishi Taparia - Issue #90
Commerce and FinTech
Tech’s raid on the banks
This week’s Economist featured what we’ve been talking about for a while - the impact of digitization on financial services and banking and how backward traditional financial services player are.
Banking’s dirty secret is that it is backward, inefficient and hidebound. Banks have formidable lobbying power, however. Wary of change, customers, politicians and unions complain when branches are closed and jobs cut—witness the recent collapse of a German mega-merger that depended on both. Regulators love dealing with a few big firms.
The interesting nuance that the magazine rightly discusses is the how companies with major user bases can add financial services into the product mix and ‘disrupt’ traditional financial players. Incumbents, through owning the ‘pipes’, have historically been able to exert control over services. That’s no longer the case, and with more consumers now trusting technology companies more than financial institutions, FIs are under attack now more than ever, often from unexpected players.
Data: E-Retail Hacks More Lucrative Than Ever
Historically, credit card information stolen from traditional brick and mortar store locations held more value than those stolen from e-commerce sites, commanding anywhere between 2 - 10x. Now, with the US migration to EMV technology and offline information being harder to steal, ‘online’ card information has become increasing lucrative leading to a significant uptick in e-retail hacks.
Apple Pay on Track To Hit 10 Billion Transactions in 2019
Apple reported relatively lackluster earnings this week, with slowing iPhone sales but growing services revenue. One interesting tidbit from the earnings call was Apple Pay transactions are expected to reach 10 billion this year thanks to increased adoption from retailers and users. Usage has spiked in mass transit locations and internationally, good signs for the company as it prepares to roll out its branded card later this summer.
Technology
Satya Nadella Remade Microsoft as World’s Most Valuable Company
With all the talk around big tech and whether the acronym should be FANG, FAANG or FANGA, Microsoft has flown relatively under the radar. However, since Satya Nadella took the reins as CEO 5 years ago, Microsoft has more subscribers than Netflix, more cloud computing revenue than Google, and a near-trillion-dollar market cap. Empire strikes back much?
At his Microsoft, there would be only “fixers,” no “complainers.” If people didn’t buy into his vision, he’d tell them, “Don’t stay. Time to move on.” During this time he showed an ability to make aggressive changes with little drama, a departure from Gates’s infamous temper tantrums of the 1990s and Ballmer’s chest-beating of the late 2000s.
A great profile on an understated, self effacing, no nonsense CEO.
SoftBank Considers IPO for $100 Billion Vision Fund
SoftBank is considering audacious fundraising plans, including a public offering of its $100 billion investment fund and the launch of a second fund of at least that size, as it looks to seize on an exploding startup scene. A crazy move for sure, and some would go so far as to say evidence that the tech bubble, however different it is than that in the early 2000s, is about to pop.
An offering like this is largely unprecedented. If successful, it would tap into a new pool of money—mom-and-pop investors—who typically can’t invest in venture-capital funds due to regulations meant to protect unsophisticated investors from risky assets.
Stripe’s fifth engineering hub is Remote
Generally the creation of an office is not that interesting, but I include Stripe’s creation of a 5th engineering hub - ‘Remote’ - for a few reasons. The cost of living in major markets (including where Stripe currently has engineering - San Francisco, Seattle, Dublin, and Singapore) continues to go up. The debate about decentralized and distributed teams continues to rage, and companies big and small are trying to figure out how to deal. Stripe establishing Remote as a location is an important stake in the ground by an very influential company in the zeitgeist, with very thoughtful rationale.
We are doing this to situate product development closer to our customers, improve our ability to tap the 99.74% of talented engineers living outside the metro areas of our first four hubs, and further our mission of increasing the GDP of the internet. Stripe will hire over a hundred remote engineers this year. They will be deployed across every major engineering workstream at Stripe.
Stripe is known for its thoughtful approach to company building and growth. I’m interested to see the waves it creates.
Climate and Energy
Jakarta Is Sinking. Now Indonesia Has to Find a New Capital
My home town - Jakarta, Indonesia - is going end up under water during my lifetime. The capital of the 4th most populous country in the world is sinking (in some areas by as much as 10 inches a year!) By 2050, 95 percent of North Jakarta could be submerged. Climate change, poor city planning and inadequate infrastructure are to blame. As the government plans to find another capital, it is certainly not the last massively populated area that will experience the effects of climate change. Houston, Miami, Dhaka - all on the list of cities moving faster than expected into the water.
LA’s own ‘Green New Deal’ sets goal of 100% zero emission vehicles by 2050, 20K+ new EV chargers
Los Angeles. The City of Angels, home of Hollywood, and as anyone who has visited or lives there can tell you, traffic. There are approximately 7 million cars in the greater LA County, a true sprawl of a locale. That’s what makes the updates to the LA ‘Green New Deal’ so ambitious.
Mayor Eric Garcetti has unveiled a number of new targets in the updated plan. The city aims to increase the percentage of electric and zero emission vehicles in the city to 25% by 2025, 80% by 2035, and 100% by 2050.
Los Angeles also wants to install 10,000 publicly available EV chargers by 2022; and 28,000 chargers by 2028 (up from 2,000 today).
Setting the stage for electrification of transportation (both personal and public), making sure the city is adequately prepared is tremendous step, and a model for cities to follow.
Renewables generated more electricity than coal for the first time in US history
For the first time in US history, renewables produced more electricity than King Coal. The Energy Information Administration estimates renewables outperformed coal by 16% in April and will generate 1.4% more in May. Now while this is not going to carry through the rest of the year (renewable generation will decrease with less sunlight during winter), 2020 is projected to see parity between renewables and coal across the entire year.
Random Tidbits
JFK | American Experience
I was recently turned on to this four-part series on JFK, produced by PBS. Forever enshrined in myth by an assassin’s bullet, Kennedy’s presidency long defied objective appraisal. This series goes into the flawed man that the young president was, his suffering through debilitating pain as a result of his Addison’s disease, and his great man approach to leadership. Worth a watch (available on Amazon Prime Video for anyone inclined).
Buffett Partner Charlie Munger Has a Side Gig: Designing College Dorms
This week was Berkshire Hathaway’s storied annual meeting where thousands gather to seek wisdom from the Oracle of Omaha, Warren Buffett, and his partner Charlie Munger. Usually discussing investments and investing strategies, this piece on Buffetts longtime partner talks about his other passion: architecture. More specifically, dorm room architecture. Who know that dorm rooms without windows and stairs outside of buildings could be so compelling!
After 40 Years, NPR’s ‘Morning Edition’ Changes Its Tune
NPR is getting a facelift. Or rather, a sound lift. The program’s new theme song, the result of months of work and debate, will debut on Monday and millions of listeners around the country will, for the first time in 40 years, get a new greeting in the morning.
Quote I’m thinking about: “Change is the law of life. And those who look only to the past or present are certain to miss the future.” - John F. Kennedy